ZAMBIA’s gross international reserves have dropped to US$2.317.7 billion in March from US$2.371.4 billion in February this year, says the Bank of Zambia (BoZ) .
BoZ head of public relations Kanguya Mayondi says the foreign reserves declined slightly to 3.2 months of import cover in March.
This means that in the event of a major crisis, the country can survive on imports for a period of three months and two weeks without going on its knees economically.
However, this is still below the six months import cover recommended by the Southern African Development Community (SADC).
Mr Kanguya said in response to a Daily Mail query in Lusaka yesterday that the 3.2 months import cover is in comparison to 3.3 months import cover recorded in February 2012.
Mr Kanguya said there has been a minimal decline in the reserves since January.
On Tuesday, BoZ deputy governor Bwalya Ng’andu said the central bank sales of foreign exchangeto the market aimed at moderating the depreciation in the exchange rate amounted to US$152.5 million.
Dr Ng’andu said in managing the exchange rate, BoZ intervenes in the market for the purpose of mitigating instability in the exchange rate and accumulating international reserves.
He, however, said the intervention has limits, and when the exchange rate is depreciating, intervention aimed at protecting the exchange rate at a certain level will result in the depletion of the country’s foreign reserves, thereby impacting negatively on the country’s ability to meet its international obligations.
Some analysts say the reduction in the foreign reserves is minimal, adding that the country is within the required threshold.
Zambia Daily Mail